Market Analysis Of China's Livestock Industry For Aussie Cattles

Analysis of the Livestock Industry by Porter's Diamond

Aussie Cattles is an Australian livestock producer in the Western Australia. Considering the growth opportunities in the market, the livestock producer wanted to expand its business in the international market. For this, Aussie Cattles considered three main international destinations or markets that include China, USA and Kuwait (Herrero et al. 2016). Keeping certain factors like the target market and the demand of the livestock products along with the best opportunities that are available in the particular country in terms of the micro and macro environment, China has been found to be most suitable market where the organisation can operate. The purpose of the report is to carry out the market analysis of China that includes the analysis of the macro environment by the means of PESTLE framework. The report shall highlight the advantages and disadvantages of carrying the business in the market of China.

The Australian livestock industry:

The livestock industry in Australia is an ever growing and a demanding industry that has always showed a peak in the demand of the products. The livestock industry includes cows and cattle. Australia is also a leading exporter of the cattle to major other countries (Henderson et al. 2017). Considering poor condition of the environment, the livestock industry has faced certain drawbacks in the recent time. This has leaded to the drop of the cattle prices in Australia.

1. Related and supported industry: Livestock industry has remained a dominant industry in the market that has given huge output to the particular country of operation. In Australia, it has been found that the livestock industry gets support from the government. For instance, it has been evident that there have been many scientific researches and policy making on improving the condition of the livestock. Several researches have been carried on to come up with innovative approaches to develop better farms for the livestock (Dangal et al. 2017).
2. Firm’s strategy structure: The strategic strategy of the firm remains in the fact that the organisation wants to grow and expand its business. In order to do so, the strategy adopted by the firm is to go global and select the most appropriate market. The firm does not believe in competitive pricing but believe in providing quality food the consumers (Hansen and Gale 2014). The price of the product varies according to the market condition.
3. Rivalry: Considering the opportunity of the market and the availability of the natural resources that helps in feeding the livestock, there are many livestock companies in Australia. Some of the popular and strong rivals include, Meat & Livestock Australia, Organisations under the Cattle Council of Australia are the major rivals of Aussie Cattle (Rivera?Ferre et al. 2016).

When it comes to the livestock market of China, it can be said that the demand of cattle and meat is very high in this country. People are fond of food and they eat almost all kinds of livestock. The country has been found to export livestock from the market of Australia and the demand for pork, beef and red meat always remain high (Henderson et al. 2017). An analysis of the livestock market condition of China can be carried on here:

1. Demand condition: China is big country when it comes to the consumption of beef and pork. The pork consumption is 64% of the total consumption. Being the largest agricultural and the developing country, China has showed great potential when it comes to the demand of livestock and meat industry (Havlík et al. 2014).
2. Firm’s strategy structure: The strategy of the firms in China is to increase the production of the meat and livestock in order tom meet the demand of the product. There is high competition in the market as more and more companies are entering in the market, but the price of the livestock products remains similar with respect to the competitors in the market. The main strategy lies in the fact the demand gets fulfilled.
3. Rivalry: If the rivals of the livestock industry are taken into account, it has to be said that China is a place where almost all varieties of animals are consumed as food (Griffith et al. 2014). Therefore, the meat industry is not only limited to the cattle and sheep but other animals as well. Thus, the rivalry among these industries is common.

1. Political factor: Politically it has to be said that China has a stable government and the government allows other industries from different countries to operate in China. The policies of trade and commerce are strictly followed when it comes to doing business in China.
2. Economic factor: China has been facing certain issues when it comes to the competition of the country with other economically powerful and wealthier countries like USA or Japan. There are different sections of people depending on their economic condition (Bailey et al. 2014). GDP has been found to increase by 4% and the per capital arte is also high.
3. Socio-economic factor: It has been expected that with the increase in the global population, there will be increase in the population of China as well. The population would reach to about 1.6 billion by 2020 (Hansen and Gale 2014). This would automatically increase the demand of the livestock in the country. In addition to this, the food habit of Chinese people is more towards non vegetarian that has automatically created greater demand of the livestock or meat industry in the country.
4. Technological factor: Technology has definitely helped to increase the productivity of this industry. It has been found that the farms have adopted new technologies in order to carry out the business activities (Henderson et al. 2017). For example there have been introduction of better incubation method or the euthanizing techniques that have benefitted the livestock industry largely (Soji et al. 2015). China is a hub of technological inventions and innovations. The country has always astonished others when it comes to the application of new technologies. In fact, there has been involvement of technology in the hybrid process of the livestock as well in order to produce better quality of meat in large quantity (Wang et al. 2014).
5. Legal factor: For the agriculture based countries, there are many legal opportunities that are given by the government of the country to carry out the business activities. The country attracts huge FDI and also welcomes other companies to operate in the China (Hansen and Gale 2014). There are many companies those are the suppliers of meat and other livestock products that have been doing business in the market of China. Trade licensing and permissions are required for doing business but the same is easily available in China.
6. Environmental factor: Topography, climate, temperature as well the precipitation in a particular country affects the livestock industry of a particular country. China experiencers a tropic climatic zone that is sub humid with better temperature to support the lives of the livestock and the cattle (Bailey et al. 2014). In addition to this, there are man-made farms called ranches where the animals are reared for the sake of meat and food. Although, sustainability is an important factor in this matter and the government expects the organisations to take approach towards sustainability of the business.

With the detailed analysis of market of China in terms of availability of various resources and the market demand, the advantages and disadvantages of expanding Aussie Cattle in the market of China can be mentioned here.

The huge population of the country is the first advantage that any company thinking of expansion can get. The population is non-vegetarian and prefer all kinds of meat. Beef and pork find special mention in this. There are many restaurants and food serving places where the demand of beef and other products of livestock are also high (Wang et al. 2016). The government policies are lucid and that can be easily adopted by the organisation in order to enter into the market of China. Apart from this, the natural environment is also favourable to support the rearing and the growth of the livestock. Thus, there are many advantages of carrying out business in the market of China.

Factor Condition

There are no such disadvantages recognised in the market of China that would hinder the business activity of the livestock industry. Some of the identified factors include excess competition in the market. The market is already saturated with huge numbers of competitors and business bodies and that it will be challenging for a new company to enter into the market. In addition to this, the value of currency of Australia is higher than that of China and so the amount of money that will be made in China might not be profitable enough for an Australia based company (Luo et al. 2015).

The business strategy that has been undertaken by Aussie Australia is expansion of the business in China. As it has been observed that the market condition is favourable enough for the company to expand in the market China, there needs to be mentioned certain strategies that would help the company to carry out its business in China in a better way. These recommendations are mentioned below:

1. Enter in a particular segment of the industry: It is recommended that Aussie Australia should enter into a particular segment of the industry like the beef selling. It has been already evident that the market for beef is prosperous; not only among the consumers but for the restaurants and the hotels where there needs to be delivered on a regular basis (Sun et al. 2014). Thus, it is recommended to select the beef selling sector for the business.
2. Developing market strategy based on competition: As it has been found that there are already the existences of many other competitors in the market, it is required to develop a high level business strategy. For example, the market strategy to be adopted by the company can be based on the quality of meat that is served by Aussie Cattle. It can use its name and origin and can propagate that their quality of meat is better because their cattle feed on better quality of fodder (Smith and Siciliano 2015).
3. To conduct promotion and advertising: In order to make people aware of the entry of the new company, it is important to carry out the promotional activities that would eventually help to create an image in the country. The promotions should focus on the prime factor like the quality of meat because of the good quality fodder that is served to the livestock. Moreover, an Australia based organisation will also get better recognition in the market.

Conclusion:

The report has highlighted the business expansion strategy of Aussie Australia, the company in the livestock industry. It has been found that China is the best suitable market for the expansion of the business. In order to understand the available opportunity in the market, a detailed analysis of the livestock industry of China has been carried on. It has been found that the political, economic, socio cultural as well as the technology and the environmental factors are favourable for the company to expand in the market. However, there is already huge competition in the market and thus, Aussie Australia has to undertake better marketing and business opportunities in order to create dominance in the market. It has been recommended that considering a particular segment where the company can operate. In addition to this, it is equally important to undertake certain marketing and promotional policies as well that would help to create a better image of the organisation in the area of its operation.

References

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